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FHA appraisers; How do they come about the value of the home?

The FHA appraiser is coming on Wednesday, I have the home inspector scheduled for Thursday. I guess if the place doesn't value at my purchase price, i'm not going to need a home inspector.

Anyway, how does a FHA appraiser come to the value of the home? Looking at comps? The neighborhood i'm looking in has million dollar homes next to 250k homes.
  • June 18 2009 - US
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Answers (6)

As a former appraiser here is what an appraiser would be looking at:

Like homes in similar neighborhoods that have sold within the last 3-6 months. 

An FHA appraiser's first concern for the house is to make sure that is it safe and does not require and type of repairs which would affect value.  HUD, has loosen up greatly over the past years regarding required repairs.

They take into account the following:  location, lot size, the overall condition,(is there peeling paint, water stains, etc.) the size of the house, which is know as gross living area, room count, any updates/improvements to the house, rooms below grade finished (basement), type of heating, does it have cooling, deck/porch/, garage, and amenities.  They will also be looking for any type of debris in the yard or code violations.

While they are in the house they will be looking at functional obsolence and are there any factors in the neighborhood which may affect value.

Many other things go into preparing an appraisal but this is the short course for today. 

Hope this helps.
  • June 19 2009
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Updated 2009 FHA Appraisal Guidelines

There are a few new guidelines that FHA appraisals have to follow, but the general theme of most of the answers from the other loan officers here is correct: 

1.  Recent Comps
2.  Market Conditions Addendum  ( Fannie Form 1004MC )

The only other appraisal guideline concern that may slightly influence an appraisal is the new HVCC agreement.  FHA does not fall into this category, but appraisers are paying attention to how these politics are impacting their business and relationships with banks. 
  • June 18 2009
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I second Mr. Adams here- FHA appraisals are conducted the same as any other, except HUD(the regulatory body for FHA) places some extra restrictions on the appraiser to report obvious health & safety issues.
  • June 18 2009
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or add for what's right with the place...better location.  With FHA depending on what needs to be repaired the appraisaer could make the appraisal subject to repairs.
  • June 18 2009
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I see. So, in theory they start at a price (based on comps) and work their way down, subtracting repairs (condition component) until they've accounted for everything that's wrong with the place?
  • June 18 2009
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The same way a non FHA appraiser woul arrive ata value.  Comps and condition.
  • June 18 2009
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